February 13, 2012 Newsletter

Dear Friends,

Tangents:

As a trafficker in climaxes and thrills and characterization and wonderful dialogue and suspense and confrontations, I had outlined the Dresden story many times.
– Kurt Vonnegut, Slaughterhouse-Five

photos of the day

February 13, 2012

A woman lights a candle in front of the famous 18th century Frauenkirche cathedral, Church of Our Lady, to commemorate the 67th anniversary of the bombing of Dresden during WWII, in Dresden, Germany. British and US bombers destroyed Dresden’s centuries-old baroque city center from Feb. 13-14, 1945.

Jens Meyer/AP

A man looks at Marc Chagall’s paintings during a media presentation of the exhibition ‘Chagall’ at Madrid’s Thyssen-Bornemisza Museum.

Susana Vera/Reuters

Market Closes for February 13, 2012:

North American Markets

Market Commentary:

Canada

By Katia Porzecanski

Feb. 13 (Bloomberg) — Canadian stocks rose, led by energy and financial companies, after Greece approved austerity plans to secure rescue funds. Mining companies’ shares fell as the bailout measure eroded the appeal of gold as a haven.

Barrick Gold Corp., the world’s largest producer of the metal, lost 0.6 percent, while Goldcorp Inc., the second-biggest producer by market value, fell 0.5 percent. Teck Resources Ltd., Canada’s largest base-metals company, fell 2.3 percent as copper declined on concern demand from China may falter. Canadian Natural Resources Ltd., the country’s second-biggest energy company by market value, rose 1.1 percent as oil recovered from a three-day low on concern sanctions against Iran will crimp supply.

The Standard & Poor’s/TSX Composite Index gained 9.3 points, or 0.1 percent, to 12,398.69 in Toronto.

“The fact that they took the bitter pill and are going to accept the austerity is puts to bed the uncertainty that the market always has trouble dealing with,” Barry Schwartz, a money manager at Baskin Financial Services Inc. in Toronto, said in a telephone interview. The firm oversees about C$400 million

($400 million). “Today was another one of those days where Canadian markets seem to lag and seem not to be paying attention to the news around the world. It should’ve been a much more positive day.”

The index snapped a seven-week rally last week on concern that plans to help Greece avoid default were unraveling and industrial production growth would slow in China. The index has gained 3.7 percent this year through today as falling U.S.

unemployment signaled Canada’s biggest trade partner was weathering the European debt crisis.

Financial companies rallied with global shares as Germany and the European Commission welcomed Greek approval of the austerity steps demanded for a financial lifeline, suggesting European finance chiefs will pull Greece back from the brink when they meet in two days.

Bank of Nova Scotia, the country’s third-largest lender by assets, gained 0.3 percent to C$52.47. Manulife Financial Corp., the country’s biggest insurer, advanced 2 percent to C$11.98.

Oil rallied on concern that Iranian crude supplies will be disrupted. Companies controlling more than 100 supertankers said they would stop loading cargoes from Iran, tightening sanctions on OPEC’s second-biggest producer.

Canadian Natural Resources rose 1.1 percent to C$38.17.

Canadian Oil Sands Ltd., the largest partner in Syncrude Canada Ltd., rallied 2.7 percent to C$22.59. Nexen Inc., an oil and gas producer with operations on five continents, gained 1.7 percent to C$22.59.

The S&P/TSX Gold Index fell for a seventh straight day as the chance Greece will win another international bailout improved and eroded the appeal of the precious metal.

“Ever since the resolution of austerity measures in Greece and Europe, people are looking at whether there will be more easing,” Timothy Lazaris, chief executive officer of Red Sky Capital Management Ltd. in Toronto, which oversees C$54 million

($54 million), said in a telephone interview. “There would’ve been a view that the answer is yes, which would’ve been good for gold, and now I think the market’s turned the sentiment negative.”

Goldcorp declined 0.5 percent to C$45.70. Great Basin Gold Ltd., a prospector with operations in South Africa and Nevada, fell 4.1 percent to 94 Canadian cents.

Barrick lost 0.6 percent to C$47.97. The company plans to sell its 20 percent stake in Highland Gold Mining Ltd., the Russian miner part-owned by billionaire Roman Abramovich’s Millhouse Capital, after output stagnated.

Copper fell for a second day as climbing stockpiles signaled slackening demand in China, the world’s biggest metals consumer.

Mercator Minerals Ltd., an operator of an Arizona mine, declined 3.4 percent to C$1.69. Copper and zinc producer Inmet Mining Corp. slipped 3.3 percent to C$65.77.

Teck fell 2.3 percent to C$39.30. The zinc and coal producer may have bought a 2.89 percent stake in Fortescue for

A$480 million ($515 million), the Australian Financial Review reported, citing unidentified people. Marcia Smith, a spokeswoman for Teck, declined to comment on the report, citing company policy.

Pulp producer Canfor Pulp Products Inc. rose 4.7 percent to C$13.40. The company was raised to “outperform” from “market perform” at Raymond James Ltd., with a 12-month price estimate of C$17. Consumption of paper products will continue to grow with Chinese income, Daryl Swetlishoff, an analyst at Raymond James, said in a report.

Alliance Grain Traders Inc., which calls itself the world’s largest lentil and pea splitter, fell 5.5 percent to C$16.70.

The company was lowered to “sector perform” from “sector outperform” at Scotia Capital Inc, with a 12-month price estimate of C$22.

US

By Rita Nazareth

Feb. 13 (Bloomberg) — U.S. stocks rose, after the first weekly loss for the Standard & Poor’s 500 Index in 2012, as Greece approved austerity plans to secure rescue funds.

Bank of America Corp., JPMorgan Chase & Co. and Caterpillar Inc. increased at least 1.7 percent to lead gains in the Dow Jones Industrial Average. Apple Inc. climbed 1.9 percent to trade above $500 for the first time. Chesapeake Energy Corp.

added 2.4 percent after the natural-gas driller said it’s targeting as much as $12 billion in asset sales and joint ventures this year. Advanced Micro Devices Inc. surged 3.4 percent after being raised at Sanford C. Bernstein & Co.

The S&P 500 advanced 0.7 percent to 1,351.77 at 4 p.m. New York time. The Dow increased 72.81 points, or 0.6 percent, to 12,874.04. The Nasdaq Composite Index gained 1 percent to 2,931.39, the highest level since 2000. The Russell 2000 Index of small companies climbed 1.4 percent to 824.81.

“This has been a risk-on rally,” Mike Ryan, the New York- based chief investment strategist at UBS Wealth Management Americas, said in a telephone interview. “The fact that the Greek Parliament was able to push through the austerity measures was widely expected. This eliminates one of the stumbling blocks, but it doesn’t solve the Greek issue. Our view is that Greece is going to struggle to make payments going forward.”

Today’s rally put the S&P 500 less than 1 percent away from its peak nine months ago of 1,363.61, which was the highest level since June 2008. The index has climbed 7.5 percent in 2012, on expectations the global economy will withstand the impact of the euro area’s debt crisis.

Global stocks gained today as Germany and the European Commission welcomed Greek approval of the austerity steps demanded for a financial lifeline, suggesting euro finance chiefs will pull Greece back from the brink when they meet in two days.

“I’m confident that the other conditions, including for instance the identification of the concrete measures of 325 million euros ($430 million), will be completed by the next meeting” of finance ministers, EU Economic and Monetary Affairs Commissioner Olli Rehn said.

The Morgan Stanley Cyclical Index of companies most-tied to the economy gained 1.1 percent. Caterpillar, the largest construction and mining-equipment maker, rose 1.7 percent to $113.70. The KBW Bank Index added 0.8 percent as 19 of its 24 stocks advanced. Bank of America rose 2.2 percent to $8.25.

JPMorgan advanced 1.8 percent to $38.30.

Apple added 1.9 percent to $502.60, after rallying for four straight weeks. On Jan. 24, the largest technology company reported quarterly profit that more than doubled. Its earnings are expanding so fast that even with the rally, the shares are trading at less than half their median valuation since 1990, data compiled by Bloomberg show. The gain since Apple reported results is almost four times as large as the advance in the Nasdaq 100 Index.

“It reminds us all of the amazing transformation of Apple over the past eight years,” Timothy Ghriskey, who oversees $2 billion as chief investment officer of Solaris Group LLC in Bedford Hills, New York, said in a telephone interview today.

“We think the stock has higher to go, $600 is next,” he said.

Chesapeake added 2.4 percent to $22.66. The sales will help the company reduce debt and fund its drilling operations as it faces gas prices that hit a 10-year low in New York last month.

Chairman and Chief Executive Officer Aubrey McClendon has vowed to cut long-term debt 25 percent by year end as the company reduces output.

Advanced Micro Devices surged 3.4 percent to $7.29. The maker of processors for personal computers was raised to “outperform” from “market perform” at Sanford C. Bernstein.

Regeneron Pharmaceuticals Inc. jumped 12 percent, the most in the Russell 1000 Index, to $114.65 as the company raised its sales forecast for the eye drug Eylea to exceed analyst estimates.

First Solar Inc. tumbled 5 percent, the biggest decline in the S&P 500, to $41.72 after being downgraded to “hold” from “buy” at Brigantine Advisors.

AmerisourceBergen Corp. sank 3.6 percent to $37.21. The drug distributor said Chief Financial Officer Michael DiCandilo left the company. The company was cut to “neutral” from “outperform” at Robert W. Baird & Co.

U.S. stocks may extend gains this year and mirror the performance of 1995, when the S&P 500 rallied 34 percent even after Mexico devalued its currency and Treasury yields dropped, Laszlo Birinyi said.

Improved investor sentiment, central-bank actions and optimism that U.S. economic data will beat estimates, will sustain gains even after the best January for the S&P 500 since 1997, the president of Birinyi Associates Inc. in Westport, Connecticut, said in a Bloomberg Television interview today.

“We still think you should buy stocks,” the fund manager said in London. “It’s a continuation of the bull market and we’re encouraged by what we are seeing in Europe. I look at the markets, I find they are strong. There’s real buying going on.

This is not short-covering or a temporary or transitory thing.”

The fund manager reiterated recommendations to buy General Motors Co., Research In Motion Ltd., Hermes International, People’s United Financial Inc. and BlackRock Inc.

Have a wonderful evening everyone.

Be magnificent!

An animal, a child and an ignoramus are slaves to their desires.

They want to satisfy them immediately, whatever the time, the place or the circumstances…

How can a man be distinguished from them?  Before satisfying his desires, a man takes into account the time,

the place and the circumstances, because he is trying to achieve an aim.

-Swami Prajnanpad, 1891-1974

As ever,

Carolann

Don’t cry because it’s over.

Smile because it happened.

-Theodore Seuss Geisel, 1904-1991

Carolann Steinhoff, B.Sc., CFP, CIM, FCSI

Senior Vice-President &

Senior Investment Advisor